Heterogeneous Labor Markets and the Generosity Towards the Unemployed: An International Perspective

Stephane Pallage () and Christian Zimmermann ()

No 88, Cahiers de recherche CREFE / CREFE Working Papers from CREFE, Université du Québec à Montréal

Abstract: In this paper, we investigate whether the different distributions of European, Canadian and US labor forces may explain their differences in unemployment insurance generosity and attitude towards moral hazard. We do so within a dynamic general equilibrium model with indivisible labor and borrowing constraints. Agents differ in their educational attainment, which translates into country-specific differences in the probabilities of finding a job as well as income prospects. We parametrize the model to a set of European countries, Canada and the United States. We then ask citizens to vote on an unemployment insurance program given a certain level of moral hazard.

Les différences dans la distribution des forces de travail en Europe, au Canada et aux USA peuvent-elles expliquer les différences de générosité de l'assurance chômage et d'attitudes vis-à-vis du risque moral? Nous répondons à cette question dans un modèle d'équilibre général dynamique avec indivisibilité du travail et contraintes de liquidités. Les agents diffèrent selon leur niveau d'éducation, ce qui se traduit par des différences dans la probabilité d'emploi et dans le salaire espéré. Nous paramétrisons le modèle pour un ensemble de pays européens, le Canada et les Etats Unis, et demandons aux citoyens de ces pays de se prononcer sur la générosité de l'assurance chômage par vote.

Keywords: Heterogeneous agents; unemployment insurance; voting (search for similar items in EconPapers)
JEL-codes: E21 D7 D58 J65 (search for similar items in EconPapers)
Date: 1999-06
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